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    Stove Kraft

    STOVEKRAFT
    Consumer Durables·4 Nov 2025
    Management Summary

    Stove Kraft delivered a robust Q2 FY26 performance with double-digit revenue and PAT growth, driven by improved consumer demand and festival season pickup. Margins expanded across gross and EBITDA levels, and the company continued its aggressive retail expansion with 300 new Pigeon exclusive outlets. While demand was temporarily impacted by GST changes, management remains optimistic about sustained growth and margin improvement, with a clear focus on debt reduction and ROE/ROCE enhancement.

    Highlights

    6

    • Consolidated revenue grew 13.4% YoY to ₹474.4 crores in Q2 FY26.

    • PAT improved 27.8% YoY, with PAT margin at 4.5% (up 51bps) in Q2 FY26.

    • EBITDA margin expanded 25bps YoY to 12% in Q2 FY26.

    • Gross margin stable at 38.5%, up 33bps YoY in Q2 FY26.

    • Successfully added 300 standalone Pigeon exclusive outlets, reinforcing brand presence and profitability.

    • ROE sequentially improved to 10.1% and ROCE to 15.5% in Q2 FY26.

    Concerns

    3

    • Sluggish demand in Q2 due to GST announcement and implementation, resulting in an estimated ₹15-20 crores revenue shortfall.

    • Tariff instability impacting new product development and high growth expectations for exports, potentially dampening the 50% growth target.

    • Aluminum price increases, though expected to be passed on, could impact consumer pricing.

    What Changed2

    vs Q3 FY26

    Guidance items8 → 13 (+5)Risks discussed4 → 3 (-1)

    Key financials

    Single quarter

    08 metrics
    1. 01Revenue₹474.4 Cr+13.4%YoY
    2. 02Gross Profit₹182.8 Cr+14.4%YoY
    3. 03Gross Margin38.5%+0.3%YoY
    4. 04EBITDA₹56.8 Cr+15.8%YoY
    5. 05EBITDA Margin12%+0.3%YoY

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Franchisee model provides Rs. 15 lakhs refundable deposit and Rs. 2 lakhs non-refundable, covering store costs apart from inventory which is realized quickly, resulting in no cash outgo for expansion.

    Debt

    Gross ₹180 crores

    Liquidity

    Liquidity disclosed

    Cash from operations was Rs. 177 crores in H1 FY26.

    Guidance & targets

    13
    CategoryTargetPriority
    Profitability
    Gross Margin
    39%
    		High
    Profitability
    Gross Margin
    closer to 39%
    		Medium
    Profitability
    Gross Margin
    40%
    		Low
    Profitability
    EBITDA Margin improvement
    1%
    		High
    Profitability
    ROE and ROCE
    closer to 20%
    		Medium
    Exports
    Exports Growth
    50%
    		Medium
    Exports
    Exports Growth
    50%
    		Medium
    Retail Expansion
    Standalone Pigeon Stores
    500
    		High
    Retail Expansion
    New Stores Opened
    25-30
    		High
    Retail Operations
    Average Store Revenue
    ₹60 lakhs per annum
    		High
    Retail Operations
    Total Revenue from 500 Stores
    ₹300 crores
    		High
    Debt
    Debt Status
    debt-free
    		High
    Debt
    Financing Cost
    zero
    		High

    Debt-free status

    within next four quarters
    CurrentGross debt of ₹180 crores
    TargetDebt-free

    Why it matters

    Achievement of debt-free status will significantly improve financial leverage and reduce financing costs.

    So, we have a gross debt of about Rs. 180 crores. ... we are very confident that within the next four quarters, we should be debt-free.

    How to verify

    capital_allocation.debt.gross_debt

    Risks & concerns

    3
    RiskSeverity

    Tariff instability impacting export growth

    Delay in tariff stabilization could dampen the high growth rate for exports, pausing new product development for export markets. — Management acknowledged

    medium

    Temporary demand sluggishness due to GST changes

    Q2 sales were impacted by an estimated ₹15-20 crores shortfall due to customer sentiment and deferred purchases following GST rate rationalization announcements. — Management acknowledged

    low

    Rising aluminum prices

    Aluminum prices are rising, but the company operates on a cost-plus model and expects to pass on price increases to consumers, though this could affect demand. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “For the new product development, we have lined up a few more categories apart from cookware wear, which product development is underway. But there is a pause until there is some stability on the tariff. So, once the stability is there, there is of course possibility of very high growth in our export business. ... while actual revenue recognition will start from the last quarter of this year, but meaningful revenue will start next year. But that is a global business and not limited only to the U.S.”

    Clarified the impact of tariffs on new export product development and provided a timeline for IKEA revenue recognition, indicating significant contribution from FY27.

    asked by Khush Gosrani

    2 min read7 chapters

    Detailed Narrative

    01

    Q2 FY26 Performance Overview

    Stove Kraft reported a robust Q2 FY26, with consolidated revenue growing 13.4% year-on-year to ₹474.4 crores. Gross profit increased by 14.4% to ₹182.8 crores, leading to a stable gross margin of 38.5%, up 33 basis points. EBITDA grew 15.8% to ₹56.8 crores, with the EBITDA margin expanding by 25 basis points to 12%. PAT margin improved by 51 basis points to 4.5%, and ROE sequentially rose to 10.1%.

    02

    Impact of GST Rate Rationalization

    The company noted a temporary sluggishness in demand during Q2, particularly between the GST announcement and implementation. This resulted in an estimated revenue shortfall of ₹15-20 crores for the quarter. However, management expects the GST reduction from 12% to 5% on approximately 35% of its portfolio, including pressure cookers and cookware, to drive long-term demand improvement and make products more affordable for consumers.

    03

    Retail Expansion and Store Performance

    Stove Kraft successfully added 300 standalone Pigeon exclusive outlets in October 2025, bringing the total to 301 stores across 120 cities and 21 states. The company aims to expand to 500 stores by 2027, focusing on North and West India. The average monthly revenue per store is ₹3.81 lakhs, exceeding the break-even point of ₹2.5 lakhs. The company is confident of reaching ₹60 lakhs per store per annum within 6-12 quarters.

    04

    Exports Business and Tariff Challenges

    The export business grew 19% in H1 FY26, with H1 revenue around ₹120 crores, and over 75% coming from the US. While the company's sales are FOB, tariff instability has paused new product development for exports. Management maintains a guidance of 50% export growth for the current and next year if tariffs stabilize, with meaningful revenue from the IKEA partnership expected from FY27, reaching full scope by FY28.

    05

    Margin Outlook and Cost Management

    Stove Kraft expects gross margins to improve in Q3 and Q4, targeting 39% for H2 FY26 and aiming for 40% in the near term. The company is confident of improving its EBITDA margin by 1% over last year for FY26. As a 'cost-plus' company, it generally passes on raw material price increases, such as aluminum, to consumers, ensuring margin stability.

    06

    Capital Allocation and Debt Reduction

    The company's gross debt stands at ₹180 crores. Management is highly confident of becoming debt-free within the next four quarters, with financing costs expected to be zero in the next four months. CAPEX for retail stores is approximately ₹18-20 lakhs per store, largely funded by franchisee deposits, minimizing cash outflow for expansion.

    07

    Strategic Focus and Market Leadership

    Stove Kraft is focused on improving its ROCE and ROE to closer to 20%. The company believes it is already a leader in the pressure cooker business and sees significant opportunity in premiumization within this category. Its strategy relies on strong manufacturing capabilities, extensive distribution networks, and maintaining an affordable value brand position to gain market share against new entrants.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.